JOHANNESBURG (miningweekly.com) – Australian lithium miner Galaxy Resources has increased the capital expenditure (capex) estimate of its Sal de Vida project, but has significantly reduced the capital cost payback period and now expects “much more attractive” financial returns from the project in Argentina’s Puna region.
The company on Monday published the results of a revised definitive feasibility study (DFS) for Sal de Vida, which increased capex to $375.5-million, compared with a 2013 study estimate of $369-million. However, the revised DFS has reduced the payback period from four years and seven months in the original DFS to two years and ten months, while improving the net present value to $1.42-billion at an 8% discount rate, compared with $565-million in 2013.
The project is estimated to have the potential to generate average revenues of $354-million a year and average operating cash flow of $273-million a year.
The study is based on resources of 1.1-million tonnes of recoverable lithium carbonate equivalent, as well as 4.2-million tonnes of potassium chloride, supporting production of 25 000 t/y of battery-grade lithium carbonate and 95 000 t/y of potash over a period of 40 years.
Revised DFS operating costs are estimated to be $3 369/t before potash credits and $2 959/t after a potash credit of $410/t for each tonne of lithium carbonate produced. This is 17% higher than its previous estimation in 2013.
The DFS has been modelled on an operation with production at these levels, assuming an initial three-year ramp-up for lithium carbonate production to achieve full capacity, with potash production assumed to be deferred by one year for production start with a two-year ramp-up to achieve its planned production capacity.
Galaxy acquired the Sal de Vida project in July 2012 from the merger with Lithium One, and at that time only a preliminary economic assessment had been completed.
The company has since funded the completion of the original DFS, which included extensive hydrology work and modelling, drilling, pump tests, resource development, pilot plant testwork, flow sheet development and engineering, logistics, market and financial modelling.